Board not consulted on wages

One of Beulah White's daughters was on the payroll at Five Rivers Community Development Corp. for three years without the knowledge of the nonprofit's board of directors, according to interviews and a review of the agency's financial documents by The Sun News.

White, the nonprofit's executive director, and her children - Dayo Smith, Five Rivers' chief financial officer, Yegide Boyd and Atu White - received salaries, bonuses and other payments totaling $796,111 between 2001 and July, the most recent month for which financial documents are available.

Included in that amount is nearly $3,900 that White paid herself for being a participant in the nonprofit's job-training classes and for providing training to the agency's low- to middle-income clients.

White also paid $3,779.72 to Smith, $1,540 to Boyd and $233.81 to Atu White for training clients and participating in the nonprofit's classes.

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Boyd was paid about $22,500 per year for the past three years, according to the nonprofit's payroll records. As janitor, Boyd would have been responsible for cleaning the nonprofit's two-room office on Front Street.

"The only people we thought were on the payroll were White, Smith and Courtney Davis [the nonprofit's receptionist]," said Sam Livingston, former president of the board of directors.

The board resigned in October, saying White and Smith were spending money and selling the nonprofit's assets without board approval.

Livingston said the board knew Atu White had done some work for the nonprofit, but it is not clear whether board members knew he was on the Five Rivers payroll.

The payments to White and her children are documented in accounting records subpoenaed by the 15th Judicial Circuit Solicitor's Office, which is conducting a criminal investigation to see if Five Rivers misspent public money.

The Sun News reviewed those records, which include itemized payments dating back to 2001, under terms of the S.C. Freedom of Information Act.

The payments to White and her family ultimately might total more, but the agency used credit cards more frequently for some expenses in recent years and those credit card payments are not itemized.

The solicitor's office has subpoenaed Five Rivers' credit card statements but has not yet received them.

In addition to the direct payments, White's family received indirect benefits, such as $3,000 per month in life, health and automobile insurance, $81,638.03 spent on travel and personal use of the agency's Volvo automobile.

"This kind of thing is unparalleled," said Gary Snyder, author of the book "Nonprofits: On the Brink" and a monthly newsletter that documents financial abuses at nonprofits nationwide.

"There were apparently no checks and balances at all at Five Rivers," Snyder said. "She [White] was basically running the nonprofit as her own private business."

White could not be reached for comment last week.

The payments - except for those made to White's daughter, Dayo Smith - were not disclosed on Five Rivers' annual tax returns. State law requires disclosure of all potential conflicts of interest, including the supervision of family members.

The S.C. Secretary of State's Office could fine Five Rivers for failing to disclose the potential conflicts and require the nonprofit to refile its tax returns with the correct information.

Among the payments made to White's family:

Boyd, White's daughter, was paid $4,050 for part-time janitorial work in 2001-02. She joined Five Rivers' staff as a full-time janitor in July 2003, earning $9,394 that year.

Boyd was paid $22,204 in 2004, $22,499 in 2005 and was being paid the $22,499 rate this year, according to payroll records.

Boyd also received $1,300 in participant stipends, $200 for training fees and $40 in expense reimbursements.

Participant stipends were given to individuals who attended Five Rivers' job-training classes.

Atu White, Beulah White's son, worked at Five Rivers during the summer months of 2002-04, payroll records show. Atu White was paid $28,723.51 for the seven months he worked during those three years.

Five Rivers also paid Atu White $233.81 for technical assistance and training fees, $300 for professional fundraising fees and $87.06 for expense reimbursements.

Dayo Smith received $255,625 in salaries and bonuses since 2001. The nonprofit also paid her $13,126.47 for technical training and assistance fees and expense reimbursements between 2001-05, financial records show.

Kelvin Smith, Dayo's husband, was paid $2,712.92 in expense reimbursements for travel he took with his wife in 2003-04. There is no documentation included with the reimbursements to show what the travel was for or why Kelvin Smith, who was not a Five Rivers employee, needed to accompany his wife.

Kelvin Smith's painting and wallpapering business, Kelvin's Koatings, also was named Five Rivers' Entrepreneur of the Year in 2004. It is not clear whether a cash prize was given as part of that award.

Beulah White was paid $413,134.51 in salary and bonuses between 2001 and July. She also paid herself $2,179.73 for technical training and assistance fees, $3006.31 for expense reimbursements and $1,708 in participant stipends for taking part in the job-training classes.

Mason Hardy, executive director of the S.C. Association of Nonprofit Associations, said most nonprofits forbid family members from supervising one another.

Diana Aviv, president and chief executive officer of Washington, D.C.-based Independent Sector, said nonprofits should be wary of hiring family members because of the appearance of conflicts of interest.

The independent sector is comprised of representatives of 550 nonprofits nationwide who conduct research and leadership programs for nonprofit executives.

"A nonprofit organization by definition serves the public good and thus should aspire to the highest standards of accountability," Aviv said. "Hiring family members can create conflicts and cast a shadow over transparency."

The payments to Five Rivers' family members are an example of the abuses that can occur when nonprofits operate with little or no oversight from their boards of directors, experts say.

"It's terribly unfortunate that these kinds of things happen at nonprofits, but it all goes back to my central point: governance matters," Snyder said.

"Nobody seems to understand that. Board are the ultimate authority for nonprofit organizations, but they don't take that responsibility seriously. In most of these cases, the boards have no idea what's going on."